Meeting establishes trust fund for retiree benefits liability

By ROBERT BARBOZA

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southcoasttoday.com

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Posted Nov. 21, 2012 at 12:01 AM

Posted Nov. 21, 2012 at 12:01 AM

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By ROBERT BARBOZA

Editor

WESTPORT — Special Town Meeting voters took a big step towards addressing the town's potential liability for retiree benefits by approving an article establishing a Post Employment Benefits Liability Trust Fund and depositing slightly more than $1.3 million in retirement reserves into the fund.

Votes on both articles were endorsed by the Finance Committee and passed with unanimous votes at the Nov. 13 Special Town Meeting.

Finance Committee member John Miller urged voters to adopt Chapter 32B, Section 20 of state law to establish the trust fund, saying it was "very important" to the town's long-range financial health. He noted that a 2007 actuarial study indicated the town's potential liability for retiree health and life insurance benefits was "somewhere between $13 and $27 million."

The town currently funds retiree benefits "on a pay-as-you-go plan" as part of regular operating budgets, Mr. Miller said. However, those annual appropriations will not cover all of the anticipated costs because of the increasing life expectancy of retirees and soaring insurance rates, he suggested.

Once the trust fund is set up, voters approved moving $1,322,366 in retiree benefits reserves into that fund. The reserve account was established in 1984 with a $100,000 deposit, and $400,000 in later deposits in the 1980s helped generate enough interest to bring the current balance to more than $1.3 million.

Rep. Paul Schmid (D-Westport), a former Selectman and Finance Committee member, encouraged voters to approve the transfer, calling it "very good fiscal management" by the town.

He noted that growing retiree liabilities are a problem statewide, and "the state legislature may soon force communities to make payments towards their unfunded liabilities. This is really smart, and I think we should approve it."

Town Administrator Jack Healey also called the transfer "an excellent beginning" towards addressing the growing liability, and hoped that the town will begin making annual additions to the trust fund to help deal with the problem.

In other financial business at the meeting, voters unanimously approved transfers of $40,000 from various line items approved in May to supplement the operating budgets of 16 different town departments. The transfers will restore small amounts cut from department funding requests to create level-funded budgets.

A voice vote approved the appropriation of $207,000 in available funds: $110,000 was earmarked to cover an anticipated deficit in the Veterans Benefits account; $70,000 transferred to the school department to hire a middle school math teacher and purchase a new elementary reading program to address low MCAS scores; and $27,000 set aside to pay interest on the bond for the PCB clean-up at Westport Middle School.

A unanimous vote authorized town officials to proceed with borrowing up to $500,000 from the Mass. Water Pollution Abatement Trust to fund a low-interest septic system replacement loan program in Westport, to be administered by the Board of Health.

The money will be borrowed from the trust at zero percent interest, and loaned out to residents at about two percent, Mr. Healey said.

Another unanimous vote authorized borrowing $610,000 to fund repairs to road and culverts damaged by Tropical Storm Irene last fall. Much of the cost of the reconstruction work will be reimbursed to the town from state and federal emergency management funds.

Both bond approvals had been previously endorsed by voters at the Annual Town Meeting, but had to be re-voted because town officials had failed to have the borrowing approved by the Capital Improvement Planning Committee.

Approval of Article 6 authorized using $65,000 from the Overlay Surplus Account to pay an abatement to Verizon New England for taxes assessed in FY2009 for utility poles and wires. The refunds were ordered due to a recent state Appeals Court decision.

Another $14,485 in available funds was appropriated to pay outstanding bills from previous fiscal years.

Two transfers from 2010 appropriations for eelgrass planting and bird monitoring at town transfers were also approved. Votes authorized $10,000 being moved into the harbormaster capital reserve account, and $1,800 to be spent on navigational aids for Westport waterways.